Federal Reserve Chair Jerome Powell stated on Friday that he sees no evidence to believe that the U.S. economy is near a recession.
“The economy is performing well,” Powell stated at a conference in San Francisco. “As I mentioned, the economy is in a good state. There is no cause to believe that the economy is in a recession or on the brink of one.”
The U.S. economy has defied expectations over the past year and a half and has not fallen into the recession that many economists predicted at the end of 2022.
In what many experts have described as a “soft landing,” inflation has significantly decreased without causing a major economic downturn. After reaching 9.1 percent in June 2022, one measure of inflation, the consumer price index (CPI), dropped to 3.2 percent.
The labor market has also remained surprisingly resilient despite repeated interest rate increases by the Fed as the central bank has worked to control inflation.
In February, the economy gained 275,000 jobs while the unemployment rate remained at 3.9 percent, marking the longest period below 4 percent since the late 1960s.
During its most recent meeting earlier this month, the Fed chose to once again keep its baseline interest rate steady within a range of 5.25 to 5.5 percent, where it has been since last summer. Powell has consistently stated that the central bank needs to observe more positive data before considering rate cuts.
“Inflation has significantly decreased while the labor market has remained strong. This is very good news,” Powell expressed at a press conference last week. “However, inflation is still too high. Continued progress in reducing it is not guaranteed. The way forward is uncertain.”
A different inflation measure closely watched by the Fed, the personal consumption expenditures (PCE) price index, exhibited a slight increase last month according to new data released on Friday.
The data revealed that prices climbed 0.3 percent from the previous month and 2.5 percent year-over-year in February.
Nevertheless, Powell mentioned on Friday that the most recent figures were “largely as we expected,” highlighting that the Fed still anticipates inflation to gradually decrease, albeit on a potentially uneven path.
